Regulatory approach

The FMA takes an outcomes-focused approach to regulation. This means we focus on the end results that regulation is aiming to achieve for consumers and financial markets.  

We have published a document that provides an update in the evolution of our approach to outcomes-focused regulation. It details how we approach regulation and provides examples of our outcomes-focused approach. It explains: 

• the key outcomes we are seeking to support
• how we communicate our priorities
• our approach to supervision, and response and enforcement
• how we enable market access; and
• how we assess our own performance. 

Read more about our outcomes-focused approach to regulation [PDF 1.6MB]

Listen to a podcast on our outcomes-focused approach with Liam Mason, FMA Executive Director - Evaluation, Oversight & General Counsel 

Below is information about the types of financial services and products we regulate. 

Direct regulatory relationship 

• Issuers
• Trading venues (eg financial product markets such as NZX)
• Alternative capital raising (eg peer-to-peer and crowdfunding)
• Audit
• Market infrastructure (eg settlement systems)
• Retail funds, KiwiSaver, superannuation etc
• Supervisors and licensed independent trustees
• Discretionary investment management services (DIMS)
• Financial Advice Providers (FAPs) 
• Derivatives issuers 

Other level of regulation/oversight 

• Brokers 
• Wholesale funds 
• Custodians 
• Retail platforms and aggregators 
• Life insurance 
• Non-life insurance 
• Retail banking 

We have a suite of tools we can use to reduce unnecessary regulatory burden including legislative and administrative notices and guidance. 

Getting the rules right

Ensuring the regulatory burden is appropriate is a key focus for the FMA. To achieve this we work closely with the Ministry of Business Innovation and Employment on policy and law reform and efficiently with other regulators. 

Using legislative notices and waivers

We have legislative, administrative notices or waivers we can use to modify legal requirements when appropriate. These include exemptions; designations; frameworks or methodologies; FMC public accountability designations and levy waivers.

Typically, individual notices help one business. Class notices have a wider impact - they can affect a larger number of businesses and their clients and can be relied on by many businesses in the same class.  

Providing timely guidance 

• Our Strategic Risk Outlook, Annual Corporate Plan, Outcomes-focused regulation document and the Financial Conduct Report tell the market about where we see the most potential for risk or harm, where we intend to focus our resources, and why. 
• Monitoring and thematic reports give feedback on what we think is good and bad conduct, and our response to that. These reports can also encourage businesses to tell us about emerging issues, understand our approach and tell us about any further need for guidance

We will be rolling out a new supervisory approach from 2025. Key features of this include:  

• Aligning our supervisory approach with the regulatory priorities as outlined in the Financial Conduct Report and with our assessment of sector and firm risks, using the data we gather from firms, e.g. regulatory returns, and intelligence from supervisory and response work.  
• More forward-looking supervision, to improve our knowledge of firms and their business models, and understand and influence how firms manage risks to the outcomes we have identified.  
• Supervisory processes that will involve the following:  
  • The nature, frequency and intensity of supervisory interactions will be guided by the impact firms have on the market. Entities that have activities across different sectors will be supervised on a group basis.  
  • For larger firms, more of our supervisory interactions will be with boards and senior management.  
  • Continued use of on-site, in-person, and desk-based supervision, as well as thematic reviews to provide deeper insights into specific issues or sectors.  
• Ongoing engagement with firms and industry groups to support good practice and reduce the risk of poor outcomes, including:  
  • Feedback focused on issues that are important for better outcomes, not on minor, non-systemic compliance issues.  
  • Publishing guidance to support compliance and clarify legal obligations.  
  • More use of informal tools to support and influence firms’ conduct, such as industry roundtables, roadshows and webinars, meetings with boards and senior management, and “Dear CEO” letters where we are concerned about emerging or growing risks.  
  • Publication of detailed sector insights reports to share the findings of our supervisory work.  

Our intention is to understand and influence how firms manage the main risks to consumer and market outcomes, through their governance, product design, distribution models, resourcing, complaints-handling, and systems, controls and processes. We want firms to have the flexibility to determine how best to meet regulatory obligations in the context of their own business.  

It will continue to be an important part of our supervisory work to assess compliance failures that have contributed to poor outcomes, to oversee remediation where required, and to take action, formal or informal, to address or mitigate these. We will also engage with firms on other conduct that detracts from good outcomes, including where we think firms may be taking an overly conservative view of legal obligations.